Texas Daily Ag Market Summary 8/14/14

Posted 10 years 106 days ago by

Feeder cattle mostly steady to $12 lower; futures lower.
Fed cattle cash trade inactive; formula trades higher; futures lower; beef prices lower.
Cotton cash prices unchanged; futures higher.
Corn and grain sorghum unchanged to lower; wheat and soybeans lower.
Crude oil higher; natural gas lower.
Stock markets higher.

Texas feeder cattle auctions quoted prices mostly steady to as much as $12 lower per cwt. One location reported a smaller decline on heifers and one quoted feeder steers steady to $5 higher. Supply/demand fundamentals have not changed much, especially the tight supply picture, but cash prices have followed futures lower amid worries that a drop in demand is coming. Feeder cattle futures were modestly lower yesterday. The fed cattle cash trade remained inactive in Texas, but cattle sold in Kansas and Nebraska at $155 per cwt, down $5 from last week’s average. That’s also likely the best Texas cattle feeders are going to do. Formula trades were 70 cents higher. One wire service report said, “Both buyers and sellers seem to be confused by sharply lower futures. Just as sellers were reluctant to price cattle when the market was storming higher earlier this summer, buyers seem nervous about bidding on cattle given the new negative psychology.” Wholesale boxed beef values were lower for Choice and sharply lower for Select-grade offerings. Estimated cattle harvest for the week through Wednesday totaled 245,000 head, up 5K from last week, but 15K below a year ago. Fed cattle futures were lower, but posted a much smaller decline than in the past couple days. Traders are still worried about demand.

More beef packing plant closures: Earlier this month, L&H Packing, one of the primary cull cattle processors in the state, announced that it is closing its plant in San Antonio due to a shortage of cattle. About 325 employees will be impacted, with 1/3 of them likely move to other divisions within the company. The closure, effective tomorrow, Aug. 15, reduces an already-limited number of cull cow and bull packers. In addition, Cargill said it will close a packing plant in Milwaukee.

Cotton cash prices were unchanged, but futures were higher. End-user buying interest picked up a little following the price declines over the past few days and there was some comments that USDA may have been somewhat generous with their forecasted Texas High Plains cotton crop. Observers commented that much of the dryland cotton in the area has missed much of the rain. However, the August report is the first of the season that is based on farmer surveys and field counts and measurements. That lends considerably more credibility to the numbers that projections earlier in the season that were based on trend yields and expert opinion. The Texas High Plains crop accounts for 62% of the state’s cotton and 25% of the national total.

Wheat prices were lower again yesterday as large world production, slack demand and a stronger dollar continued to pressure the market. A stronger dollar makes U.S. goods more expensive for foreign buyers and pushes business to other sellers that are already very competitive on their prices. There are some lingering concerns about the quality of the European wheat crop, but that has not yet led to any significant new U.S. sales either.

Corn and grain sorghum cash prices were unchanged to lower, while corn futures were lower for the September contract, but higher for all subsequent contract months. Reports said Mexico and an unknown destination bought 238,000 metric tons of U.S. corn yesterday and weekly ethanol production was higher.

This week’s U.S. Drought Monitor (click here for the Texas map or here for the U.S. map and summary) again showed very little change in conditions in Texas, with 83% of the state rated in some degree of drought or abnormal dryness, unchanged from a week ago. The percentages of the state in each drought category also shifted by less than one percentage. Parts of East and Southwest Texas and a small area in the Trans-Pecos remained drought-free. Nationally, the total area experiencing abnormal dryness or some degree of drought remained declined one point to 47% percent of the contiguous states.

Stock markets closed higher yesterday in spite of a report showing retail sales were flat during July, compared to expectations for a small increase.

Disclaimer: The information compiled in the Daily Market Summary is obtained from a variety of sources, including those available on the Internet, that are believed to be reliable and accurate, but are in no way guaranteed. This information is intended to provide only a summary of market trends and a daily snapshot of agricultural markets and economic indicators. It should not be relied upon as a sole source of market information. Commentary is the author’s alone and does not in any way convey official TDA policies.